CJAC: Civil Justice Association of California

Jan 27, 2011

CJAC Disappointed by Supreme Court Ruling in Kwikset Case

Legal Reform Group Fears Decision, While Narrow, Will Lead to More Unfounded Litigation and Further Weaken State’s Business Climate

SACRAMENTO - The Civil Justice Association of California expressed disappointment at the state Supreme Court’s ruling today in a case involving Proposition 64, the landmark ballot measure CJAC sponsored in 2004 that requires plaintiffs to have actually suffered some injury in order to file lawsuits under the state’s Unfair Competition Law (UCL).

The court ruled 5-2 in the case of Kwikset Corp. v. Superior Court that plaintiffs were actually damaged by the company’s claim that locks it produced were made in the U.S. when a few of the components in the locks were produced overseas.

“We disagree with today’s ruling because Proposition 64 clearly states that plaintiffs can’t file lawsuits based on the Unfair Competition Law unless they have suffered injury in fact and have lost money or property,” said CJAC President Kimberly Stone.

Justice Ming Chin, who wrote the dissenting opinion, agreed.

“In direct contravention of the electorate’s intent, the majority disregards the express language of (Proposition 64) and makes it easier for a plaintiff to achieve standing under the UCL,” Chin wrote, in a dissent joined by Justice Carol Corrigan.

“All plaintiffs now have to allege is that they would not have bought the mislabeled product… This cannot be what the electorate intended when it sought ‘unequivocally to narrow the category of persons who could sue businesses under the UCL.’”

Stone warned that the court’s ruling may further clog the state’s courts, at a time when Governor Brown is proposing to cut $200 million in funding for court operations as part of his plan to balance the state budget.

“Especially in an era when our courts are already overcrowded and facing severe budget cuts, it’s no time to open the floodgates of litigation in cases where no damage resulted,” Stone said.

“Although the opinion was narrow and strongly upheld the central point of Proposition 64 - you still have to have suffered damage to file a UCL lawsuit - it will still lead to more litigation. Making it easier for a plaintiff to achieve standing results in more class action claims and puts further pressure on businesses to settle these cases to avoid the high costs of litigating. This will give businesses already reluctant to locate or expand here because of our poor legal climate further pause and jeopardize the state’s economic recovery.”

Proposition 64, which was approved by a 59 percent to 41 percent margin in November 2004, was put before the voters by CJAC to rid the state of frivolous lawsuits in cases where nobody suffered any real injury or loss. Ironically, as Chin noted, during the campaign to enact the measure, the Kwikset case was specifically noted by CJAC and other sponsors of the measure as an example of the kind of shakedown lawsuit that Proposition 64 was designed to eliminate.

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